No budget as Louisiana Legislature adjourns in meltdown

Updated June 9, 2017 at 8:13 AM;Posted June 8, 2017 at 6:14 PM

The Louisiana Legislature approved a historic criminal justice package during its 2017 regular session, but left many budget and tax issues on the table. (Photo by David Grunfeld, NOLA.com | The Times-Picayune)

The Louisiana Legislature approved a historic criminal justice package during its 2017 regular session, but left many budget and tax issues on the table. (Photo by David Grunfeld, NOLA.com | The Times-Picayune)

The Louisiana Legislature ended its 60-day annual session Thursday (June 8) in a meltdown, as lawmakers shouted about finances on the House floor. Legislators failed to reach agreement on the $28 billion operating budget or the construction budget for the fiscal year starting July 1, forcing a special session that itself could cost more than a half-million dollars.

The Legislature did come together with Gov. John Bel Edwards to pass a comprehensive package of criminal justice reform measures, in hopes that Louisiana will shed its reputation for having the highest incarceration rate in the world. But for the first time in years, it ended the regular session without annual budgets because the House, Senate and Edwards failed to compromise on how much money should be spent.

Thirty minutes after the regular session ended, the special session officially began. Right away, the House decided it would take a three-day weekend and not resume work until Monday -- over the wishes of the governor and Senate leadership. "I wish quite frankly we were working the weekend," said Senate President John Alario, R-Westwego.

During the final 20 minutes of the regular session, the House GOP leadership blocked multiple attempts by Speaker Pro Tempore Walt Leger, D-New Orleans, to bring votes to the floor for a spending plan that the governor and Senate supported. At one point, Leger seemed to have enough support to pass both operating and capital budgets and avoid a special session.

But Speaker Taylor Barras, R-New Iberia, would not allow it. Appropriations Committee Chairman Cameron Henry, R-Metairie, left the House floor at one point, a procedural move that Democrats suspected was intended to block Leger's efforts. "We are throwing up procedural barriers to voting on the budget," Leger said. "I'm sorry."

Barras did not make himself available to news reporters for comment Thursday night. Henry said the regular session ended without budgets because the Senate and Edwards were unreasonable during negotiations, and he said they should be blamed. "He seems to be one of the few governors that uses the threat of special sessions to try to get his agenda passed, instead of actually working with members to get a vote on it," Henry said.

Henry disputed that Leger had the votes to pass the budgets before deadline. He said Leger was trying to circumvent proper procedure by bringing up the bills without Henry's blessing. "We weren't going to lose the vote," Henry said in an interview.

Both Republican and Democratic members were upset by the House's meltdown. "I'm disgusted," said Rep. Julie Stokes, R-Kenner, who sided with Leger and wanted to vote on the budget. "Grow up and start working on solving the people's problems."

The failure to pass a spending plan is a sign of the increasing fiscal dysfunction in the Legislature. While lawmakers mostly gave up weeks ago on making long-term fiscal changes, they arrived confident Thursday morning that the annual budget would be approved on the session's final day. In the end, they failed to deliver by the 6 p.m. deadline.

It made for a sharp contrast with criminal justice reform. Edwards and lawmakers had pulled together a bipartisan coalition that included conservative religious organizations, civil rights groups and big business to overhaul the state's criminal justice laws. That effort is supposed to go a long way toward bringing down Louisiana's world-leading incarceration rate, and to save money on prison operations. It's been called historic and a once-in-a-generation change.

Republicans and Democrats agree that the churn of the prison system, particularly with repeat drug offenders, hurts children, families and likely the economy. There's widespread agreement that the "tough on crime" approach of the past few decades hasn't made the state safer. Louisiana still claims one of the highest murder rates in the United States, despite locking up more people per capita than any other state.

The criminal justice package is designed to drop the prison population by 10 percent and save $78 million over the next decade. It requires that about $184 million be redirected from prison spending to rehabilitation programs, job training and education for inmates, and to victims rights organizations. Edwards has promised to come back with more changes next year, such as simplifying criminal sentencing to make it easier to understand, to push those gains.

But if the Legislature managed to pull together on criminal justice reform, it couldn't find the same resolve to deal with fiscal issues. Not only did it fail to adopt annual budgets, it made no progress on long-term budget and tax reform.

Last year, legislative leaders and Edwards promised that they would make tough decisions in 2017 to put the state on more stable financial footing in the long run, but the public is still waiting. And with no annual budgets in place, lawmakers have put many public services such as hospitals and universities in more peril.

Legislators did not seriously discuss fixing the larger fiscal problems during the regular session. The recommended "best practices" on taxes and budget, made by a blue-ribbon task force that the Legislature convened, were largely ignored by lawmakers and, to a certain extent, the governor.

The main tax proposal from Edwards centered on a new business tax, called a commercial activity or gross receipts levy, that the task force hadn't suggested. The governor said he diverged from the recommendations of the task force, which had focused on an income tax increase, because he knew the House wouldn't support it.

But the House didn't give serious consideration to the governor's alternative proposal -- or to any other tax overhaul that was suggested, including those made by conservative GOP members. Instead, House Republican leaders said they wanted to focus on cutting spending. Business activists, meanwhile, said they want the state to relax some funding dedications, to make it easier to move money around in the budget and cover priorities such as higher education and transportation.

The House did put forward a proposal to reduce spending, but it was rejected by the Senate. The failure of the two chambers to agree on whether spending should be reduced is why no operating budget was passed by the end of the session.

Even if the Legislature had adopted the House budget plan for next year, it was never enough to address Louisiana's systemic fiscal problems without renewing taxes or imposing new taxes. Neither the House nor the Senate was willing to unlock dedicated funds, many of them now restricted to elementary and secondary education, transportation needs and the TOPS college scholarship program, to move money to other priorities.

All this leaves Louisiana still facing a "fiscal cliff" estimated at more than billion dollars a year from now, when a number of "temporary" taxes expire. Thus the Legislature is likely to return to Baton Rouge sometime in the fall for yet another special session after the one that started Thursday night, costing taxpayers millions of dollars for staffing and lawmaker expenses. By law, the spring 2018 regular session may not address new or renewed taxes.

The deficit projected for the fiscal year starting July 1, 2018, is mostly the result of the state sales tax being scheduled to fall on that date, from 5 percent to 4 percent. Last year, the Legislature passed a temporary hike to the tax in order to generate money quickly to keep hospitals and higher education institutions open. Legislators had promised to figure out a long-term solution before the tax increase expires, but they have not.

Even the House GOP leadership admits that lawmakers won't be able to cut their way out of the billion-dollar shortfall. But the tax options in a special session aren't expected to be different than the ones House Republicans rejected in the just-ended regular session.

Big business prefers renewing the higher sales tax, or at least part of it, beyond mid-2018. House Democrats, who have the votes to block any tax bill, say they will not support such an extension. They prefer a business or personal income tax change, which the House Republicans oppose.

This standoff in House does not look likely to change over the next few months. "If the will does not exist now, it will not exist in a special session," said Rep. Barry Ivey, R-Baton Rouge.

And despite the bipartisan work on criminal justice reform, partisan rancor in the Legislature appears to be growing worse. The House, in particular, had some divisive discussions that could affect relationships between the various factions.

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Several Democrats also ended up shouting at Barras as the regular session drew to a close, after Barras refused to let the budget votes take place.

House Democrats say any work on long-term fiscal stability will require a fundamental shift in the way Barras, the House Speaker, doles out committee assignments. They say the committees that handle tax and budget issues are more conservative than the House in general, and that the committees kill proposals the House overall might support.

The Democrats are asking that Barras switch out some members of those committees for either Democrats or more moderate Republicans before a special session on on budget and taxes. Otherwise, they fear the same results. "We can't do tax reform the way the committees are set up now," said Rep. Gene Reynolds, of Minden, the head of the House Democratic Caucus.